Three stories this week stuck in the editorial craw here at Badlands.
First, a sneaky little Saturday story (if you were on spiritual retreat all week, just read Saturday’s paper – the least read -- for the real news) about JP Morgan agreeing to pay $13 billion in fines “over mortgage securities.” Although the “agreement” was made in Washington DC and New York City, it concerns crimes against people from Merced, Modesto and Stockton CA to Shanghai, Berlin, and elsewhere. So it’s a local/global story about how Morgan CEO Jamie Dimon took the words of that great prophet of everything new, Hazel Henderson, seriously: “Think globally, act locally.” Or, in a more contemporary American style: “Be both a local and a global economic predator!”
Second, another masterpiece of intelligent reporting from Pam Martens. This time, Ms. Martens has branched out from her usual beat of corruption on Wall Street where she worked for 21 years to show how the plutocratic ethos of NYC’s hometown industry has corrupted the state’s judiciary.
Third, Pepe Escobar delivers himself of a vision from the long, global road he travels as “the Roving Eye,” in which he catches a glimpse of a world that is shaking off American hegemony. In another piece, a paragraph of which is attached at the very bottom of this posting, Escobar suggests why he thinks – and we ought to begin to think -- about why culture matters. It makes you wonder if the great common ground between the Arabs and American petroligarchs, is that neither “culture” was touched in the least by the Renaissance.
The impression that the three pieces made on us -- three among the many we read last week -- was Rot. Aristotle, an early philosopher on the subject of virtu, or arete in his language, noted that plutocracy dispenses with all notions of virtue in favor of wealth at the criterion of political power. There it is, and here we are again, just like 1913. -- blj
Los Angeles Daily News
Report: JP Morgan agrees to pay $13 billion fine over mortgage securities
By Pete Yost, Associated Press
WASHINGTON — JPMorgan Chase & Co. has tentatively agreed to pay $13 billion to settle allegations surrounding the quality of mortgage-backed securities it sold in the run-up to the 2008 financial crisis, a person familiar with the negotiations between the bank and the federal government said Saturday.
If the agreement is finalized it would be the government’s highest-profile enforcement action related to the financial meltdown that plunged the economy into the deepest recession since the Great Depression of the 1930s.
The person, who spoke on condition of anonymity because the deal has not been finalized, said Attorney General Eric Holder, Associate Attorney General Tony West, J.P. Morgan CEO Jamie Dimon and the bank’s general counsel, Stephen Cutler, negotiated the tentative settlement in a Friday night phone call.
The person said the tentative agreement does not resolve a criminal investigation of the bank’s conduct. It is being handled by federal prosecutors in Sacramento, Calif.
On Friday night, Holder told the bank that a non-prosecution agreement was a non-starter — meaning that the Justice Department will continue to conduct the criminal investigation of the financial institution, said the person. As part of the deal, the Justice Department expects JPMorgan to cooperate with the continuing criminal probe of the bank’s issuance of mortgage-backed securities between 2005 and 2007, the person said.
JPMorgan spokesman Brian Marchiony and Justice Department spokesman Brian Fallon declined to comment.
Of the $13 billion, $9 billion is fines or penalties and $4 billion will go to consumer relief for struggling homeowners, the person said.
When the housing bubble burst in 2007, bundles of mortgages sold as securities soured and the investors who bought them lost billions. In the aftermath, public outrage boiled over that no high-level Wall Street executives had been sent to jail. Some lawmakers and other critics demanded that the big bailed-out banks and senior executives be held accountable.
In response, the government in January 2012 set up a task force of federal and state law enforcement officials to pursue wrongdoing with regard to mortgage securities.
New York is Drowning in Bribes and Corruption
by PAM MARTENS
The insidious greed and public looting that Wall Street has nurtured to an art form in New York City is metastasizing like a virulent tumor strain throughout the state, fraying the social fabric and crushing people caught in its grip like bugs.
On Tuesday evening, September 17, 2013, Seema Kalia was scheduled to give testimony before the first public hearing of the New York State Moreland Commission on Public Corruption. But according to Michelle Duffy, a spokesperson for the Commission, when Kalia’s name was called that evening, there was no response.
Kalia could not respond because she was abruptly arrested in the foyer of a courtroom on the very morning she was set to give testimony, ostensibly for contacting her ex husband, a portfolio manager on Wall Street, seeking back support payments. Kalia is being charged with violating a court order barring her from contact with her husband because she is alleged to have thrown one of his own men’s shoes at him in 2012 – a device characterized by the District Attorney’s office as a “weapon.” Typically, a misdemeanor charge of this nature would not result in jail time.
In Kalia’s case, however, she has been jailed at Rikers Island since September 17 and when she went before a Judge on October 4, she was sent back to jail for another 33 days after she declined to plead guilty to attempting to do bodily harm with a “weapon.” Her bond was doubled from $7,500 to $15,000. The earliest she might be released is November 7, her next court date.
Kalia alleges that the Manhattan District Attorney’s office has stalled her case for almost a year by getting the court to agree to repeated adjournments. Two separate phone requests to the DA’s office yielded no response to clarify the allegation. (A faxed letter of inquiry to Cyrus Vance Jr., the Manhattan DA, and Jocelyn Samuels at the Civil Rights Division of the Justice Department have also failed to elicit a response.)
The Moreland Commission testimony that did occur on September 17 at Pace University, in a room ridiculously too small to handle the mushrooming numbers of victims of the crime wave that New York is experiencing, mirrored the kinds of charges that Kalia has been making since 2011. (The overflow of people wanting to testify, who were left outside on the sidewalk, staged protests.)
Preet Bharara, representing the U.S. Department of Justice as U.S. Attorney for the Southern District of New York, the district that has failed to rein in the serial crimes by Wall Street’s biggest firms, said that “Public corruption, based on all the evidence, appears rampant. And the ranks of those convicted in office have swelled to absolutely unacceptable levels.” Bharara said that his office has had to prosecute “State Senators as well as State Assemblymen; elected officials as well as party leaders; city council members as well as town mayors; Democrats as well as Republicans.” It was likely little comfort to the audience that it’s a bipartisan crime wave.
The U.S. Attorney for the Eastern District of New York, Loretta Lynch, testified that there is a “pervasive problem of corruption by elected and appointed officials” in New York, citing former State Senate Majority Leader Pedro Espada who was convicted of stealing funds from Soundview Health Clinic, a federally funded clinic he operated in the Bronx. Lynch also called out former State Senator Shirley Huntley, who was sent to prison for her role in stealing funds from Parents Information Network, a non-profit organization she established to assist parents of New York City public schoolchildren.
Dick Dadey, Executive Director of Citizens Union, testified that “there is a crime wave of corruption” and it has been increasing over the past 12 years.
When it came time for the general public to testify about public corruption, it wasn’t legislative leaders the witnesses railed against, it was corrupt judges. Multiple witnesses testified to having real estate property stolen through corrupt court proceedings. One witness, Dale Javino, said he was cheated out of his life savings in bankruptcy court and what happened to him “is like what happens in Nazi Germany…”
Leon Koziol testified that the retribution he sustained after reporting unethical judges to authorities “reads like a John Grisham novel…” Echoing the testimony of others, Koziol said a series of complaints over the years to the Committee on Judicial Conduct failed to reach the investigative threshold, “leading the common citizen to logically conclude that such commissions are a mere window dressing, which does more to facilitate misconduct than it does to rectify it.” Koziol concluded by saying it is one thing to ignore public corruption but quite another to target and punish the whistleblower.
Ellen Oxman said “I believe the topic that you all wanted to hear was the unethical conduct by elected public officials – they would be the judges of the courts of this state.” Oxman went on to say that “If you can have litigation in this state, in this country, with a judge who accepts forged documents, by lawyers who are not admitted into the case, and you don’t even know the litigation has come to pass, then we don’t have a democracy.”
Much of the focus was on judges said to have been corrupted by the more powerful party in divorce or custody matters. Nora Renzulli, reading from a previous complaint letter she had written, explained to the Commission that “Just as in the Catholic Church hierarchy’s longstanding tolerance for sexual abuse of children by priests, there is a broader scandal brewing in New York Court System’s tolerance for legally sanctioned judicial misconduct when judges reward an aggressive and litigious parent with custody and child support, who then excludes the other parent from relationship with the children.” This was a refrain that would be heard over and over again that night.
Janice Schacter, a retired attorney, said that the Thomas Street location of the New York State Supreme Court “is pay to play; orders are not enforced, laws are not applied, domestic violence is treated with derision and conflicts of interest are ignored. Deference and preferential treatment are given to wealthy spouses and lawyers of prestigious firms.” Schacter also testified that the judge involved in her case attempted to censor her contact with the press by threatening to send her to jail at Rikers Island for 20 days. She said she was still having nightmares about it.
William Galison explained how he has spent years providing testimony “regarding egregious corruption in the nomination and confirmation” of Jonathan Lippman, Chief Judge of the State of New York and Chief Judge of the Court of Appeals, only to have his evidence ignored by investigatory bodies. After citing a litany of conflicts of interest in the confirmation process, Galison played a tape recording of a voice mail message left on his answering machine by a member of the Judicial Nomination Commission telling him that his evidence against the judge was going to be shredded.
A woman who stated at the outset that she would attempt to get through her testimony without breaking down, Margarita Walter, said her family had fled communist Cuba in 1959 seeking freedom and human rights in the United States. Instead, over the past 12 years, Walter said she has been subjected to “cruel and retaliatory tactics for exposing egregious misconduct and racketeering” in the Westchester courts, a wealthy suburb on the outskirts of New York City.
Walter’s allegations parallel those of Seema Kalia, the woman arrested on the same day she was to present testimony before the Moreland Commission. Both women have been denied access to seeing their children. Both have been stripped of their assets. Both believe their court cases were rigged. Both have filed complaints with U.S. Attorney Preet Bharara and the Commission on Judicial Conduct, to no avail.
The one thing that sets the two apart is that Seema Kalia is behind bars in Rikers Island over a misdemeanor charge which is incorrectly listed as a Class D Felony at the New York City Department of Correction inmate lookup web site. I provided the correct information to the Department of Correction, showing that the shoe-throwing incident had previously been reduced to a misdemeanor by the District Attorney’s office, and asking if someone might have provided phony documents to incarcerate Ms. Kalia. A response was promised by my deadline. None was forthcoming.
The idea that judges could be bribed or have quid pro quoarrangements with high powered lawyers is not charting new ground in New York City.
In 2007, New York State Supreme Court Judge Gerald P. Garson was convicted of accepting bribes from divorce attorney Paul Siminovsky. During an eight-month investigation by the Brooklyn District Attorney’s office, a video camera secretly placed in Garson’s chambers captured Siminovsky plying Garson with expensive cigars and cash. In court proceedings, Siminovsky testified that he entertained the judge with drinks and meals in exchange for favorable courtroom treatment. Siminovsky pleaded guilty and was sentenced to a year in jail.
A Brooklyn rabbi, Ezra Zifrani and his daughter, Esther Weitzner, pleaded guilty to giving $5,000 to an intermediary who “clearly implied he was going to bribe Judge Gerald Garson” in November 2002. Garson, at the time, was the judge hearing a child custody dispute between Weitzner and her ex-husband.
To get around the random computer selection of judges to hear cases, court employees were brought into the conspiracy and given bribes to steer cases to Garson, according to the District Attorney’s office.
After years of appeals, Garson, who had heard over 1,100 divorce cases, served only 2 ½ years in prison before being paroled on December 23, 2009. His maximum term could have been as much as 15 years at the time of sentencing but he received a sentence of 3 to 10 years. His early release set off protests with signs saying “Crime Pays In New York City” and “Justice for Sale.”
At the time all of this was playing out, Charles J. Hynes, the Brooklyn District Attorney, said judgeships were for sale in New York. Wayne Barrett, writing for The Village Voice, published an in-depth investigative report on January 9, 2007, writing: “It wasn’t just that a case could be fixed. The darker secret was that the bench itself had been bought, that its polyester black robes were on a perpetual special-sale rack, that smarmy party bosses, ensconced at 16 Court Street across from the supreme court they ruled, demanded cash tribute to ‘make’ a judge. The district attorney, Joe Hynes, who first heard the rumor 36 years ago when he was a young prosecutor running the office’s rackets bureau, said in 2003 that he’d have to be ‘naive to think it didn’t happen,’ that it was ‘common street talk that this has been going on for eons.’ ”
For years, myself and others warned that Wall Street was destined to collapse under the weight of its own corruption. It did. Now civic minded members of the public are blowing the whistle on a systemically corrupt court system desperately in need of a Federal investigation, not a state-run commission investigating fellow cronies.
If one needs the ultimate proof that New York cannot heal itself, consider the amount of the bail bond that was set prior to sentencing after Judge Garson was convicted of accepting bribes while seated as a New York State Supreme Court Judge. His bond was set at $15,000. That’s the amount set in Seema Kalia’s case for a misdemeanor charge stemming from throwing a man’s shoe.
Pam Martens has been a contributing writer at CounterPunch since 2006. Martens writes regularly on finance atwww.WallStreetOnParade.com.
THE ROVING EYE
The birth of the 'de-Americanized' world
By Pepe Escobar
This is it. China has had enough. The (diplomatic) gloves are off. It's time to build a "de-Americanized" world. It's time for a "new international reserve currency" to replace the US dollar.
It's all here, in a Xinhua editorial, straight from the dragon's mouth. And the year is only 2013. Fasten your seat belts - and that applies especially to the Washington elites. It's gonna be a bumpy ride.
Long gone are the Deng Xiaoping days of "keeping a low profile". The Xinhua editorial summarizes the straw that broke the dragon's back - the current US shutdown. After the Wall Street-provoked
financial crisis, after the war on Iraq, a "befuddled world", and not only China, wants change.
This paragraph couldn't be more graphic:
Instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.
The solution, for Beijing, is to "de-Americanize" the current geopolitical equation - starting with more say in the International Monetary Fund and World Bank for emerging economies and the developing world, leading to a "new international reserve currency that is to be created to replace the dominant US dollar".
Note that Beijing is not advocating completely smashing the Bretton Woods system - at least for now, but it is for having more deciding power. Sounds reasonable, considering that China holds slightly more weight inside the IMF than Italy. IMF "reform" - sort of - has been going on since 2010, but Washington, unsurprisingly, has vetoed anything substantial.
As for the move away from the US dollar, it's also already on, in varying degrees of speed, especially concerning trade amongst the BRICS group of emerging powers (Brazil, Russia, India, China and South Africa), which is now overwhelmingly in their respective currencies. The US dollar is slowly but surely being replaced by a basket of currencies.
"De-Americanization" is also already on. Take last week's Chinese trade charm offensive across Southeast Asia, which is incisively leaning towards even more action with their top commercial partner, China. Chinese President Xi Jinping clinched an array of deals with Indonesia, Malaysia and also Australia, only a few weeks after clinching another array of deals with the Central Asian "stans".
Chinese commitment to improve the Iron Silk Road reached fever pitch, with shares of Chinese rail companies going through the roof amid the prospect of a high-speed rail link with and through Thailand actually materializing. In Vietnam, Chinese Premier Li Keqiang sealed an understanding that two country's territorial quarrels in the South China Sea would not interfere with even more business. Take that, "pivoting" to Asia.
All aboard the petroyuan
Everyone knows Beijing holds Himalayas of US Treasury bonds - courtesy of those massive trade surpluses accumulated over the past three decades plus an official policy of keeping the yuan appreciating very slowly, yet surely.
At the same time, Beijing has been acting. The yuan is also slowly but surely becoming more convertible in international markets. (Just last week, the European Central Bank and the People?s Bank of China agreed to set up a US$45-$57 billion currency swap line that will add to the yuan's international strength and improve access to trade finance in the euro area.)
The unofficial date for full yuan convertibility could fall anywhere between 2017 and 2020. The target is clear; move away from piling up US debt, which implies, in the long run, Beijing removing itself from this market - and thus making it way more costly for the US to borrow. The collective leadership in Beijing has already made up its mind about it, and is acting accordingly.
The move towards a full convertible yuan is as inexorable as the BRICS move towards a basket of currencies progressively replacing the US dollar as a reserve currency. Until, further on down the road, the real cataclysmic event materializes; the advent of the petroyuan - destined to surpass the petrodollar once the Gulf petro-monarchies see which way the historical winds are blowing. Then we will enter a completely different geopolitical ball game.
We may be a long way away, but what is certain is that Deng Xiaoping's famous set of instructions is being progressively discarded; "Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership."
A mix of caution and deception, grounded on China's historical confidence and taking into consideration serious long-term ambition, this was classic Sun Tzu. So far, Beijing was laying low; letting the adversary commit fatal mistakes (and what a collection of multi-trillion-dollar mistakes... ); and accumulating "capital".
The time to capitalize has now arrived. By 2009, after the Wall Street-provoked financial crisis, there were already Chinese rumblings about the "malfunctioning of the Western model" and ultimately the "malfunctioning of Western culture".
Beijing has listened to Dylan (with Mandarin subtitles?) and concluded yes, the times they-are-a-changing. With no foreseeable social, economic and political progress - the shutdown is just another graphic illustration, if any was needed - the US slide is as inexorable as China, bit by bit, spreading its wings to master 21st century post-modernity.
Make no mistake; the Washington elites will fight it like the ultimate plague. Still, Antonio Gramsci's intuition must now be upgraded; the old order has died, and the new one is one step closer to being born.
Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).
…Machiavelli taught us that individual will is as crucial as international power play in determining foreign policy decisions. The Florentine stressed how fortuna (fortune) can be capricious, and how history can be contingent. So how does a great Prince steer his state? By deploying virtu (virtue).
Oh no, this has nothing to do with the guilt-ridden Christian mish-mash, which also happens to be a crucial pillar of the "American exceptionalism" concept. It's all got to do with classical values predominant in the Ancient World - from Greece to Persia. Virtue as in knowledge, strength, courage, and cunning… – Pepe Escobar, Asia Times, ‘Our’ weaponized, Wahhabi bastards, Oct. 18, 2013.